Certificate for policyholder: requirement to provide a certificate: company policyholders
Chargeable event rules cease to apply to companies
The rules for taxing companies on gains from policies and contracts were changed in FA08. The chargeable event gain rules no longer apply from the start of the first accounting period of the company to begin on or after 1 April 2008 - the ‘company’s start date’ - and instead the loan relationships rules apply - IPTM3900 onwards. So, during the year ended 31 March 2009, all companies moved to the new rules and from 1 April 2009 no companies remained within the chargeable event gain rules.
Transition to new rules
In most cases, where the policyholder is a company, the company will be liable under the loan relationships rules from the company’s start date, not the chargeable event gain rules. The insurer is not required to issue the company with a chargeable event certificate unless it has information to suggest that the taxable person is different from the policyholder and is not a company.
An insurer may not know the date that the company ceases to be within the chargeable event gain rules since that is dependent on the company’s accounting period. If so, the insurer should continue to report any chargeable event gains on the policy to the company until 31 March 2009 to ensure that any gains that arise before the company ceases to be within the chargeable event gain rules are correctly reported to the policyholder.
Although there is no requirement to issue chargeable event certificates to a company policyholder that is within the new rules, an insurer will not be penalised for doing so. This recognises that, for instance, it may not be easy for an insurer to distinguish on its systems policies held by a company from other policies. So, the insurer may continue reporting chargeable events on or after 1 April 2009 to policyholders if it is more convenient or easier to do so.
No requirement to report gains on deemed surrenders
The transitional rules deem a surrender of the policy on the last day that the company remains within the chargeable event gain rules - IPTM3930. Insurers are not required to report the gains on these deemed surrenders either to policyholders or to HMRC.
Further reference and feedback IPTM1013